Topic: How have the private pension products, the 3rd pillar, been performing so far?
Author: InvesTAO Research
- Pension target FoFs, a group of Chinese private pension investment funds that mostly consist of target-date FOFs and target-risk FOFs, have proven to be the a successful pioneer in China’s 3rd Pillar pension reform.
With BOCOM Schroder and Aegon-Industrial in the lead, pension Target FOFs have reached US$16.6bn of net assets, with a growth of 84% compared to 2020. China’s new private pension program, encouraging Chinese citizens to contribute towards a personal pension account every year, opens up more opportunities for international asset managers
- Target-risk funds make up 85% of pension target FOFs despite the initial design encouraging more allocation to target-date funds to align with global market trends.
More risk profiles other than conservatives are being explored but the current stock market volatility presents a challenge to such strategies.
- Asset managers have diversified focuses in time series and allocation in target-date strategies.
ChinaAMC is the leader of China’s target-date FOFs with the most AUM at nearly US$500mn. In addition, Zhong Ou’s fund offering document introduced a clear and detailed glide path, deemed distinct among their peers and demonstrates their efforts in investor education in this new asset class.